Barnes and Noble 2008 Annual Report Download - page 16

Contractual Obligations
The following table sets forth the Company’s contractual obligations as of January ,  (in millions):
CONTRACTUAL OBLIGATIONS PAYMENTS DUE BY PERIOD
Total
Less Than 1
Year 1-3 Years 3-5 Years
More Than
5 Years
Long-term debt $ — $ — $ — $ — $ —
Capital lease obligations — — — — —
Operating lease obligationsa1,961.8 362.7 611.6 421.3 566.2
Purchase obligationsb 45.0 30.5 11.0 3.5 —
Other long-term liabilities refl ected on the Company’s
balance sheet under GAAPc — — — — —
Total $ 2,006.8 $ 393.2 $ 622.6 $ 424.8 $ 566.2
a Excludes operating leases for Calendar Club of $11.3, $2.8, $4.7, $3.3 and $0.5 for total, less than 1 year, 1-3 years, 3-5 years and more than 5 years,
respectively.
b Excludes purchase obligations for Calendar Club of $0.4, $0.2 and $0.1 for total, less than 1 year and 1-3 years, respectively.
c Excludes $23.8 million of unrecognized tax benefi ts for which the Company cannot make a reasonably reliable estimate of the amount and period of
payment. See Note 9 to the Notes to Consolidated Financial Statements.
See also Note 8 to the Notes to Consolidated Financial Statements for information concerning the Company’s Pension and Postretirement Plans.
Off-Balance Sheet Arrangements
As of January , , the Company had no off -balance
sheet arrangements as defi ned in Item  of Regulation
S-K.
Impact of Infl ation
The Company does not believe that infl ation has had a
material eff ect on its net sales or results of operations.
Certain Relationships and Related Transactions
See Note  to the Notes to Consolidated Financial
Statements.
Critical Accounting Policies
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” discusses the
Company’s consolidated fi nancial statements, which
have been prepared in accordance with accounting
principles generally accepted in the United States. The
preparation of these fi nancial statements requires
management to make estimates and assumptions in
certain circumstances that aff ect amounts reported in
the accompanying consolidated fi nancial statements and
related footnotes. In preparing these fi nancial state-
ments, management has made its best estimates and
judgments of certain amounts included in the fi nancial
statements, giving due consideration to materiality. The
Company does not believe there is a great likelihood that
materially diff erent amounts would be reported related
to the accounting policies described below. However,
application of these accounting policies involves the
exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could diff er
from these estimates.
Merchandise Inventories
Merchandise inventories are stated at the lower of cost
or market. Cost is determined on the fi rst-in, fi rst-out
(FIFO) basis. The Company uses the retail inventory
method on the FIFO basis for  and  of the
Company’s merchandise inventories as of January ,
 and February , , respectively.
Market is determined based on the estimated net
realizable value, which is generally the selling price.
Reserves for non-returnable inventory are based on
the Company’s history of liquidating non-returnable
inventory.
The Company also estimates and accrues shortage for
the period between the last physical count of inventory
and the balance sheet date. Shortage rates are estimated
and accrued based on historical rates and can be aff ected
by changes in merchandise mix and changes in actual
shortage trends.
Contractual Obligations
The following table sets forth the Company’s contractual obligations as of January ,  (in millions):
CONTRACTUAL OBLIGATIONS PAYMENTS DUE BY PERIOD
Total
Less Than 1
Year 1-3 Years 3-5 Years
More Than
5 Years
Long-term debt $ — $ — $ — $ — $ —
Capital lease obligations — — — — —
Operating lease obligationsa1,961.8 362.7 611.6 421.3 566.2
Purchase obligationsb 45.0 30.5 11.0 3.5 —
Other long-term liabilities reflected on the Company’s
balance sheet under GAAPc — — — — —
Total $ 2,006.8 $ 393.2 $ 622.6 $ 424.8 $ 566.2
a Excludes operating leases for Calendar Club of $11.3, $2.8, $4.7, $3.3 and $0.5 for total, less than 1 year, 1-3 years, 3-5 years and more than 5 years,
respectively.
b Excludes purchase obligations for Calendar Club of $0.4, $0.2 and $0.1 for total, less than 1 year and 1-3 years, respectively.
c Excludes $23.8 million of unrecognized tax benefits for which the Company cannot make a reasonably reliable estimate of the amount and period of
payment. See Note 9 to the Notes to Consolidated Financial Statements.
See also Note 8 to the Notes to Consolidated Financial Statements for information concerning the Company’s Pension and Postretirement Plans.
Off-Balance Sheet Arrangements
As of January , , the Company had no off-balance
sheet arrangements as defined in Item  of Regulation
S-K.
Impact of Inflation
The Company does not believe that inflation has had a
material effect on its net sales or results of operations.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
See Note  to the Notes to Consolidated Financial
Statements.
CRITICAL ACCOUNTING POLICIES
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” discusses the
Company’s consolidated financial statements, which have
been prepared in accordance with accounting principles
generally accepted in the United States. The preparation
of these financial statements requires management to
make estimates and assumptions in certain circum-
stances that affect amounts reported in the accompanying
consolidated financial statements and related footnotes.
In preparing these financial statements, management has
made its best estimates and judgments of certain amounts
included in the financial statements, giving due consider-
ation to materiality. The Company does not believe there
is a great likelihood that materially different amounts
would be reported related to the accounting policies
described below. However, application of these account-
ing policies involves the exercise of judgment and use of
assumptions as to future uncertainties and, as a result,
actual results could differ from these estimates.
Merchandise Inventories
Merchandise inventories are stated at the lower of cost
or market. Cost is determined on the first-in, first-out
(FIFO) basis. The Company uses the retail inventory
method on the FIFO basis for  and  of the
Company’s merchandise inventories as of January ,
 and February , , respectively.
Market is determined based on the estimated net realiz-
able value, which is generally the selling price. Reserves
for non-returnable inventory are based on the Company’s
history of liquidating non-returnable inventory.
The Company also estimates and accrues shortage for
the period between the last physical count of inventory
and the balance sheet date. Shortage rates are estimated
and accrued based on historical rates and can be affected
by changes in merchandise mix and changes in actual
shortage trends.
2008 Annual Report 15